Introduction to Pay-Per-Clicks (PPC)

Basically, pay-for-clicks is an advertising system offered by the search engines where your site is listed prominently in an ad when a certain keyword or phrase is queried. Your advertisement displays in designated ad areas at the top or down the right side of the search engine’s results page.

Cost per click

You pay a fee for each click on your ad. This is called cost-per-click, or CPC. You only pay when a user clicks on the link leading to your website. You can to set an upper limit; a dollar-budget, so that the ad turns off when the number of clicks add up to your prearranged limit.

Bidding

You bid on the keywords against other companies, and whoever bids highest gets the top ad spot on the page with the rest of the bidders in order of their bid amount displaying under each other down the page. If the company at the top is paying 79 cents per click, you can bid 80 cents and end up with the top listing.

It’s a fluid landscape, though. Bids go up and down, bidders come and go. For most smaller companies, thankfully, adjusting bids isn’t a full time endeavor; checking in every 3 days to a week is sufficient.

Content display ads

You can also chose to display your ads on content sites. These are 3 party websites that display relevant PPC ads in their pages, and get paid to do so. For example a site that sells dog food, may display Google PPC ads for say, dog leashes, the theory being that people on dog food sites are probably also interested in dog leashes. These kind of ads are usually quite a lot cheaper than search ads but usually lead to less clicks.

Click through rates

Click-through-rates (CTR) is the ratio between the number of times your ad was displayed to the number of times people clicked on them; if your ad showed 1000 times and was clicked on 10 times, your CTR is 1%.

Average CTR varies a lot depending on the product or service, the target market, brand or non-brand advertising, ad content and a ton of other considerations. Healthy CTR’s range from 1% and up to 5-6%.

Effectiveness

It is still true that most people will click on organic results; sites ranking high due to optimization, before clicking on ads. A lot of people I talk to say they never even notice PPC’s. However, PPC’s are a multi-billion dollar industry — it’s where Google makes it’s money — so they do work.

So, how much does it cost?

CPC’s vary from industry to industry.

In a 2012 study by WordStream, CPC rates were most expensive for advertisers in the financial industry, with an average of $3.09 per click for search and $1 per click for content display. Jobs and education came in 2nd at $1.80. Shopping sites averaged $0.25 per click and had the highest CTR with 5.23% of ad impressions resulting in a click.

So, that’s pay-for-clicks in a nutshell. There is, of course, much more to pay-per-click adverting such as ad targeting, the format of ads, ads quality, optimization, rotations…the list goes on. Because of all the settings and options, a PPC campaign is a science and takes a while to set up and tweak for maximum impact.

Is it something for you?

Luckily, you don’t have to commit to any length of time and you can turn off a PPC campaign immediately, and stop the charges to your credit card.

If you’re doing well in the search engines, you may not want to invest in PPC’s and spend your marketing money elsewhere. However, there’s a limit to how many keywords you can optimize a website for and PPC’s gives your website visibility for other phrases. For branding reasons, some companies want to be visible in both the regular search results and in ads, and go both routes.

Setting aside some money for a trial may be well worth the time and money. Google offers coupons now and again that they mail out, or you can try doing a search for online PPC coupons.